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Federal Reserve Chairman Jerome Powell sent mixed messages to investors during his semi-annual congressional testimony on Tuesday.
Speaking in parliament, he said the central bank would not cut interest rates “until we have greater confidence that inflation is moving sustainably towards 2 percent.”
But he noted that inflation has fallen significantly from a 40-year high hit two years ago and the U.S. economy is cooling, and “more positive data will increase our confidence that inflation is moving sustainably toward 2 percent.”
So what can Wall Street take from his first day of testimony? Here are some key takeaways.
Powell is stressed about the election. Powell dodged questions from several senators about White House politics, such as when asked about the so-called Biden economics, commenting, “I’m not going to touch a sentence that has that word in it.”
But politics are hard to avoid when former President Donald Trump has said he would not reappoint Powell if elected and has accused him of considering cutting interest rates to give Democrats an edge in the 2024 elections.
That may be why Chairman Powell was sure to emphasize on Tuesday that the central bank is an independent institution.
“Congress has entrusted the Federal Reserve with the operational independence it needs to take the long view in pursuing its dual mission of maximum employment and price stability,” Powell said.
Joseph Brusuelas, principal and chief economist at RSM US, said the Fed’s independence is reassuring to U.S. and global capital markets because investors need to believe the central bank can be trusted and will do what’s best for the economy, rather than stimulating the economy and influencing markets ahead of the election.
“The impression is that the Fed is trying to set a landmark ahead of the upcoming presidential election,” Brusuelas said. “In an era of economic populism and the possibility of a second Trump administration, the idea of central bank independence is much more important than is generally understood or appreciated among elected officials and the general public.”
Inflation is no longer the only risk: Powell’s message on Tuesday was largely consistent with his recent comments on Fed policy, with one big exception: EY chief economist Gregory Daco said Powell subtly signaled his intention to begin “recalibrating monetary policy.”
While the Fed chairman noted that policy decisions would depend on data, “higher inflation is not the only risk we face,” he said. “Reducing policy restraints too late or by too little could weaken economic activity and employment too much.”
The latest jobs data shows that the economy and labor market remain strong, but U.S. job growth slowed in June, leaving some analysts concerned about the timing of the Fed’s interest rate cuts — and fearing that if the central bank waits too long, it could tip the economy into recession.
“We know the economy is performing strongly. What policymakers need to assess is how inflation and the labor market perform over the coming months,” Daco said.
The market reaction was muted, but yields are rising. Powell’s acknowledgment that keeping rates high for long periods could put the economy at risk should have been good news for investors eager for a rate cut. But that message was tempered by “the chairman’s mantra that the Fed is waiting for more evidence that inflation is credibly falling before acting,” said Chris Larkin, managing director of trading and investments at E*TRADE, a former Morgan Stanley associate.
As a result, investors barely yawned on Tuesday, with the S&P 500 closing up less than 0.1%.
“The fact that the S&P 500 was roughly flat during the chairman’s testimony suggests traders are focused on the inflation numbers,” Larkin said, referring to U.S. Consumer Price Index data due later this week that will help investors gauge whether the Fed has made further progress in tackling inflation.
But Treasury yields rose on Tuesday, signaling that investors do not expect a rate cut over the next few meetings.
The September Fed meeting is scheduled to be held “live.” Powell has repeatedly noted that the Fed’s policy decisions are made in “real time” using the latest economic data, meaning they are not decided in advance, but investors still consider the outcome of the July meeting to be predetermined: 95% of investors expect the Fed to keep interest rates steady, according to CME’s FedWatch tool.
But it’s unclear who will win in September: About 75% of investors think the Fed will cut rates, while about 25% think they’ll keep them on hold.
And more to come: We can expect to hear more from Chairman Powell ahead of the September meeting.
The Fed chairman will continue testifying before Congress on Wednesday.
Powell has a packed social schedule through the end of the month, including a “wide-ranging interview on the current state of the U.S. and global economies” with David Rubenstein at the Economics Club of Washington, D.C., next Monday, a regular press conference after the Fed’s policy meeting in late July, and a speech at the Jackson Hole Economic Symposium in August.
That means the Fed has plenty of time to recalibrate its messaging and temper market expectations.
This was the lawsuit brought by another victim whose pleasant vacation turned into a voyeuristic nightmare: A woman was secretly recorded undressing in a rental property, and the images were stored on the computer of a sex offender who allegedly spied on unsuspecting tenants for years.
Airbnb, one of the world’s largest short-term rental companies, has seen this happen before and typically aims to resolve hidden camera incidents quickly and secretly.
However, this time things played out differently.
Testifying in a court-ordered deposition earlier last year, an Airbnb representative provided a rare glimpse into the company’s hidden camera problem: Airbnb has issued tens of thousands of customer support tickets related to surveillance devices over the past decade.
During hours of testimony, Airbnb employees also said that the company doesn’t typically call police when guests complain about hidden cameras, even if children are involved. But the company may contact hosts about complaints as part of an internal investigation, a step that law enforcement experts say could hinder criminal investigations by giving suspects time to destroy evidence.
A CNN investigation found that Airbnb has consistently failed to protect its guests, despite knowing that hidden cameras are a persistent concern within the industry. Moreover, Airbnb’s corporate strategy is designed to thwart regulation of the short-term rental market and distance itself from responsibility for the safety and privacy of its guests.
The full detailed investigation by my colleagues Isabel Chapman, Mailley de Puy-Kamp and Audrey Ash can be read here.
My colleague Chris Isidore said Boeing sold just 14 new jets last month, mostly freighter sales, including one to replace one that had a door plug burst in flight about six months ago.
The company sold just three 737 Max jets, two to unidentified customers and one to Alaska Airlines as a replacement for an aircraft that suffered a door plug rupture while approaching 16,000 feet during a flight on Jan. 5. The remaining 11 were 777 freighters.
While this was one of the strongest sales months of the year, the first half of 2024 still ended with total sales down 70% compared to last year. The 14 total sales was up from just four in May and seven in April. However, it was down 95% from the 304 total orders in June 2023.
Boeing’s sales have plummeted since the Alaska Airlines disaster, as even airlines eager to expand their fleets hold off on purchases while the company deals with its many problems.
